NASSCOM EMERGE Community Catalyst for Growth of Emerging & Start-Up companies

Dear Sarada,

If USP wouldn't exist, the basic concepts of "Targeting" and "Segmentation" of a market, fall on shaky ground!

USP and Differentiators exist at many stages in the business. Today industrywide jargon of Innovation is adding to what? Well, its the creation of IP's and other important specific products/ services by the business.

In the service space, though everything seemingly points to the same thing, but the USP of customizability according to the requirements of the client is what matters.

The customer today holds more knowledge, he wants value for his penny! And lets be honest we are not alone in the market, as we are not in a monopolistic market. Thus "what you have so do I" its all about how do you make sense to the end consumer.

I feel this is where the challenge lies for service firms, but the solutions exist in may be finding the right team of consultants for oneself! People who understand your business.

"At times we are moving so fast that we don't realize that we just overlooked the answer"

Thus Differentiators and USP's do exist, but only if you realize and don't overlook!

Best Regards,
Paritosh Sharma

WeYouPoint.com 

USP & Differentiators are not merely marketing terms but it reflects the core of the company. Can your customer differentiate you from the market, are you able to offer any value which only you can offer. It need not be anything new but offering a service better then the others. This is critically important for long term stability of the business

Almost all customers can see through whether the USP & differentiators being talked in the sales cycles are genuine or is it just a sales talk.

Unless on the inside the company is not clear "why should anyone partner with us", what is so unique about us and bring it as a practise in the company, business will be hard to come by.

While I agree with you that most companies on the outside have marketing USP's but if anyone digs a little deep everyone offering the same and hence the struggle will continue. 

Hi Sarada,

Interesting question. My thinking is this:

Differentiators may be many. A USP is by its very nature a singular proposition. In other words you many have many things that others don't have (differentiators) but you choose one aspect and build it into a USP; usually the strongest point.

All Differentiators may also not necessarily be of great value to your customers. So a USP is developed which is chosen as a message 'handle' because you feel it is the most valuable point for your audience.

Differentiators may also simply be 'features' while a USP (a good one) talks about the value or benefit to the cutsomers.

Hope some of this makes sense.

regards

konrad

Sarada, at a very high level, it may be true that all Services companies are the same. So, like Sunil says, the struggle continues! But my own experience in an earlier company was more in line with Paritosh's comment of not overlooking an answer. Let me explain.

We used to build apps for American and European customers and, like most others, would talk of "web-based apps" in specific verticals. Looking at past projects during an internal Review, we realized that there was a pattern in them, probably driven more by salespeople's comfort with specific apps than by any tactic on our part. But the pattern existed, so we coined this term of "customer-facing apps" for the stuff that we did. We presented ourselves as a company that specialized in building apps that sat between our customer and our customer's customer. We started using related terminology in our marketing material, in our presentations and even in our internal training and discussion documents. We also started outbound contact programs for prospects that we thought would be interested in such a "specialization". In essence, we built a marketing program, if you will, around an internally-manufactured USP. It worked well, both as something the prospect could relate to and as something employees could focus on.

I guess the moral of the story is that differentiators need not be the traditional ones that VCs talk about (domain, vertical, technology, etc.) It can be pretty much any "pattern" that is relevant to your prospect and that you can back up with real data. In that sense, Services companies can probably build as good USPs as product companies can.

Ms Sarada,

While all cos do programming, they are not in the business of programming services.

Depending on the domain( manufacturing, Telecom..), service segment ( billing applications, sales application, plant maintenance..), Technology segemnt ( Mainframe, web based or web enabled etc..), Database orientation ( Oracle 10 g based or Access based...), Large clients ( not less than USD 500 million , or not more than Rs 500 cr) , domestic and overseas, direct contract or through Tier 1 or 2 vendor, and our keen ness to target low hanging fruits or high value fruits, we differe with each others.

With so large variables as business specialization, each co finds comfortable with margins available in their choice customer segment.

If the delivery calls for programmers DBAs, or architects, that  does not make them to be in same business. Otherwise construction of a housing apartmnts, hotel, tower or dam will not be different. They call for specialised contractors who all use same masons, labourers, cement and building materials.

Each co depending on their owners. CEO or investor profiles ( tastes, comfort, aspirations, cambat guts, tenacity and passion to win) fall in their own area and segment of comfort or say incompetency. Recall Peter's principal-- everyone rises to the level of their incompetency. So are the IT orgns.

Can they not do more and differently. Certainly Yes, but are restricted by their management bandwidth and grasp of High and Low performance expectaions ( read sharing on the topic High and Low performance of individuals, teams and cos --in the same collectice X).

Trust now we agree all IT service cos are not doing same things.

Sarada,

When we build technology solutions,functional  expertise,domains, business competencies, we will make sure that there are some areas which are our core-competencies. That is the one which make us and our services distinct  in the market. The success is that , how well we communicate these to our customers & prospects. Domains, verticals, specializations were USPs or differentiaters but no more.

I find companies use different propositions.For Example, there are few in-house developed processes which improves your operational efficiency and can have create direct value to the business objectives of your customer, certain KPIs , certain metrics that we attained, some specific organizational structures which gives direct value to the customer , patents, etc. It should be difficult for our competitors to copy these gains in short time and those are the differentiaters.

Yesterday evening on UTVI TV Channel, there was an interview with Jack Trout- markting guru of global repute. Same was repeated this morning. Watch out for repeat telecast....

He states that Differentiate or Die-- that was also appearing on ticker--very harsh reality- no one likes but that is a fact. Business entities have no reason to exist without differentiators. No only that business cos have to burn midnight oil to research and come up with clearly benchmarked differentiator every day and month.

Example challenge for Airtel and Vodafone to sell iphone costing 31k and 36 k. So many reviews in print media and TV channels-- how will it sell. That would be a failure...Fact is it sells, as it has own segment of fanatics who line up midnight to be FIRST to get hands on. Which mobile retail outlet opens at 12 midnight.....that is the power of differentiator...

Every SW cos, in demestic market or overseas market or mix market space has to do everything to search/ create and hit the street only by differentiator. Otherwise with ME TOO line, we are developing new competitors, who may lure away our human assets as well as business... 

Differentiator is not price cutting, but compelling proposition of our capability/service/thought leadership, not just technology delivery ( as anyway in that space, no SME can ever beat big brothers...and that is so stale..) . Why should the cutsomer or that targetted segemnt pay you more, or even pay same what they could buy from big brothers from same country...

Differentiator requires research, benchmarking and home work.....

As someone who has about 23+ years of experience, having help build a service company that was Boston/Bangalore based and then several product companies in Silicon Valley and now building a software company that is CA/Chennai based, differentiators are extremely important and what is even more difficult is persisting on the differentiator and turning down business that does not help youy build on the differentiator.

One simple fact about services is that you need to produce code for every penny you get from a customer and in software products ( must be in apps development business too) that equation is totally out of whack! That's why Microsoft writes code once and sells it millions of times and service companies need to write code for every penny they get! There itself is a big disadvantage. Plus in my experience severe price competition pulls down everybody, even the good ones.

In the face of daunting odds like this, what do you do as a service company? Select your differentiator - The Niche area you want to specialize in - They are staring you in the face and your own customers are telling you everyday if you listen carefully - It could be Microsoft Sharepoint Portal expertise, C# expertise or expert in Agile technology - Scrum. Pick your niche, stick with it with great discipline, turn down offers to do Java services, price your services higher than others, you will watch business roll in like crazy! We have been there, done that! We built a business in 1994 building software products on contract only for US companies. We charged slightly higher than others and still got business! Customers like confidence and focus and don't mind paying a bit more if they think that you know what you are talking about!

I know as a business person it is very very very difficult to turn down business opportunities but differentiators are everything! Hope this helps!

Guts to decline contracts not falling in the 'core strength' area, inisting on higher hourly rate, twisting the competition game to our own advantage-- redfining the odds etc can easily come to SMEs only when

- you do home work on every lead/account with 'out of box' counter thinking ( CxOs must spend time on that)

- you enjoy challenging yourself ( indeed it is lonely or pay for an external consultant or reviewer or mentor)  

Often in SMEs, services cos we tend to fall for low hanging fruits, due to hurry to show more customer wins and keep factory ( development delivery ) loaded. That induces to expand our tech and domain skill bank, inducing multiple ideas. Leading to nowhere.

Focus and self discipline to stick to high earning, core capability is the hall mark of high performing individuals . teams and cos. Kannan - you have hit the NAIL!!!

Sarada:

I do not have statistics to prove or disprove the points you are making. But based on my interactions and experience, I have seen some companies with great focus & USP and many companies who are willing to do anything under the sun.

When comes to market segmentation, everyone (little exaggeration) is HIGHLY FOCUSING on one market - the US and all rich industries!

Sarada - if you have a few customers, go spend time with them. Ask them why they chose you....you are likely to get the real answer from them.

We did that 3 years back...put 3 of our customers in a room and they spent a day on why they bought us, what value we provide them, what gaps we have in our offering. Believe it or not, 2 of them told us that we sold our software product too cheap!!! We do biz with them still...and have acquired many more customers since then.